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Abstract

All health systems exercise some form of purchasing, which, in its most basic form, constitutes the allocation of funds to provider organizations. When purchasing goes beyond the simple reimbursement of products and services and is aligned to societal healthcare needs and wishes, it has the potential to play a key role in determining a health system's overall performance. However, no single organizational model of purchasing can, or should, be applied to all health systems. Purchasing arrangements must be determined chiefly by each country's main form of healthcare funding and provision.

Purchasing goes well beyond the mere contracting of providers. It includes the central role played by citizens and their governments as well as by providers' organizational forms. A central lesson derived from our analysis is that if policy-makers are to achieve their desired results, they need to take a broad systems approach to purchasing and act upon all the various components of the purchasing function. If purchasing is narrowly focused on individual elements such as contracts, payment systems or provider competition, it will not reach its full potential. For instance, the introduction of a new case mix-based payment system to improve efficiency will succeed only if providers can count on the managerial and organizational ability to respond to these new financial incentives and if the health interventions financed through the new payment system are informed by cost and effectiveness evidence and respond to the health needs and priorities of the specific population being served.